Home Buying in San Diego>Question Details

kim_kandles, Home Seller in Hobart, IN

Can a buyer back out of a home purchase if the loan has closed but not funded? It has taken 3 weeks to fund. I'm worried the buyer can cancel.

Asked by kim_kandles, Hobart, IN Wed Dec 18, 2013

Help the community by answering this question:


Hi Kim,

If everything is agreed upon, find a way to contact the daughter and move the signature along. Sounds like there should have been some provisions for timing to sign the deed, but that only comes in hind sight.

Best of luck,

Mark & Kari Shea
Shea Real Estate
National Association of Realtors
CA BRE Brokers License 01713506
0 votes Thank Flag Link Wed Dec 18, 2013
I'm sorry...the original post would not let me type as much as I needed to explain better. I used to be a mtg loan processor, therefore the "terminology". I was buying a small lake cabin on a contract for deed with the option to sell at any time, which I chose to do. The buyer, is a cash buyer. The person I was buying from, or my "lien holder' suddenly became greedy when she found out I was selling and decided to do everything she could to keep me from it. Coming from the mtg industry I had made sure all the contract for deed docs were very clear and legal, she did not win that battle. The loan has closed at the title company. The buyers have signed, and I have signed. They had to send the deed to the original lien holder and her daughter to sign the deed before they fund and disperse checks to me and the lien holder. She has signed and returned, they are now waiting for it to come back from the daughter. I am just worried that since it has been so long the buyer has the chance to back out, this is something I am not clear on. I should say the buyer has the keys, it is a small cabin and I no longer live in state so I told the agent to let them have them once they closed, they have already switched lights over, etc and seem to be happy, but I am paranoid...because the lien holder is crazy to say the least, and I do not want to start this process all over again...
0 votes Thank Flag Link Wed Dec 18, 2013
The best person to talk to is your agent. They should be doing all of this for you.
Flag Thu Dec 19, 2013
Has your agent been able to contact the lien holder to see what the snag is in returning the signatures? Good luck with the lien holder.
Flag Thu Dec 19, 2013
The buyer can always cancel. However, the real question here is why the loan has not funded?

J.R. Thrasher
0 votes Thank Flag Link Wed Dec 18, 2013
Generally speaking, the buyer can always cancel. If all contingencies have been removed however, there are will be a monetary consequence for the buyer to do so.

Loans cause complications all the time. It's usually best to wait these things out! What are the agents involved saying?

Good luck.
0 votes Thank Flag Link Wed Dec 18, 2013
Your question is a little confusing because the terms you use are very specific to real estate and mortgage people but are used less precisely outside the industry. As a former San Diego lender, here are how some of your terms are used in that area:
A loan is "funded" when the lender wires money to escrow.
The sale - and the loan - are "closed" when the proper deeds are recorded with the county AND the escrow officer distributes all funds held in escrow to whomever is to receive them.
When you say the loan is "closed" do you mean "approved"?
I agree with Jimmy, you need to speak with your broker (who may or may not be a REALTOR(R), many agents are not REALTORS(R)). Most agents create a timeline for their clients to illustrate the specific event sequence scenario and mandatory milestone dates for their sale. Ask you agent to take you through that timeline - it should answer your questions.
0 votes Thank Flag Link Wed Dec 18, 2013
Short answer is, "yes, but . . ." You should ask your Realtor to clarify what will happen if they don't get funded. If the contingencies are lifted, they will likely have to forfeit some or all of their earnest money to you. It could go to mediation, then arbitration and stall the selling process, maybe even trial if either party didn't sign the arbitration clause, depending on everything. If they haven't lifted contingencies, it might not be worth the hassle to not just make it a clean cancellation.
0 votes Thank Flag Link Wed Dec 18, 2013
In my opinion, the bigger concern is rather the buyer will get the loan or not. (I do not understand what you mean by the loan closed). I am guessing you meand the loan docs were signed. I would have your agent check with escrow and see what the funding conditions are and what remains prior to funding.
Good luck,
0 votes Thank Flag Link Wed Dec 18, 2013
I don't know the exact details of how they handle the recording there in CA, but where I'm at the Title Company will not finalize the documents and record the paperwork at the Register of Deeds certifying the sale unless the funding has been completed.
Web Reference: http://plymouthhomes.tv/
0 votes Thank Flag Link Wed Dec 18, 2013
In California, buyer could back out, if loan contingency hasn't been removed.
0 votes Thank Flag Link Wed Dec 18, 2013
Depends if you have a financing contingency in your contract. What is holding up the financing?

Alex Greer
Loan Officer
NMLS #1056079

0 votes Thank Flag Link Wed Dec 18, 2013
please see my reply to all...maybe that will explain better :)
Flag Wed Dec 18, 2013
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